FOR RETIRING FARMERS AND THEIR FAMILIES

What goes in a share farming agreement?

A share farming agreement sets out who the two businesses are, which land and for how long, what each of you brings, who pays for which costs, how the income is split and calculated, who funds improvements, who decides what on the farm, what records you both see, and how disagreements are settled and the arrangement ends.

Write all of it down. More than any other arrangement, share farming punishes a handshake.

Why it matters so much

A sharefarmer is usually not an employee. They're running their own business alongside yours. In New South Wales the law treats a sharefarming agreement as an agricultural tenancy. Two businesses, two sets of books, two tax returns, no joint bank account, and no set payment to either party.

If that isn't documented properly, you may be treated as having formed a partnership, with the liability and tax that comes with it, whether either of you meant to or not. That's the single biggest legal risk in share farming, and it's usually discovered late.

What the agreement must cover

• The two businesses. Who the parties are, in what legal capacity, and a plain statement of what the arrangement is and isn't. Separate entities, separate bank accounts, separate tax returns.
• The land, and the term. Exactly which land, for how long, and what happens at the end.
• What each party provides. Land, infrastructure, machinery, labour, management, livestock. Itemised. Guessing who supplies the ute is how arguments start.
• Who pays for what. Every input, with the proportion set out: seed, fertiliser, chemical, fuel, freight, animal health, contractors, repairs. If a cost isn't listed, decide now who wears it.
• The income split, and how it's worked out. Not just the percentage. What it's a percentage of, when it's struck, and who does the sums.
• Capital improvements. Who funds them, who benefits, and how it's settled. Write it down before the pump breaks.
• Who decides what. Rotations, stocking rates, timing, agronomy. Where the sharefarmer has authority, and where they need to consult you.
• Records and reporting. What each of you gets to see, in what form, and how often. This is the clause that prevents most disputes, and almost nobody includes it.
• Livestock shares, if there are any, and how they shift over time if the agreement includes a pathway to ownership.
• Disputes, and the exit. How you settle disagreements, how either of you ends it, and how you unwind two businesses cleanly.

Improvements need care

Soil health, weed control and infrastructure upgrades lift the land's value beyond the life of the agreement. If the sharefarmer pays for them, they're building your capital value without the long term benefit. Settle it at the start.

Don't just copy a template

Model codes and standard clauses exist, and they're a useful start, particularly in dairy. Don't adopt one wholesale. Herd size, infrastructure and who's really bringing what have to set the split on your farm.

Take it to agricultural specialists: an agricultural accountant, and a solicitor who has done farm transitions. Ask your solicitor whether the agreement creates a partnership, and what in it prevents that.

The full guide, Ageing on Farm, is free at cultivatefarms.com/resources.

You can build your own plan at cultivatefarms.com/plan.